Fitch lowers growth expectations for Spain

Updated: 2012-01-04 09:38


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MADRID - Risk assessment agency Fitch on Tuesday lowered its perspectives for economic growth in Spain and now predicts the country's economy will experience zero-growth in 2012 and grow by just 1.5 percent in 2013.

The new prediction is down on Fitch's previous expectation for Spain in which the agency predicted an improvement of 0.5 percent for this year and 1.5 for 2013, a reduction partly explained by Spain's high level of unemployment, which was confirmed on Tuesday as standing at 4,422,359 by the Ministry of Employment.

Fitch adds that the problem of unemployment could cause further problems for Spain's banks and has warned that it could further reduce its ratings for Spain's main financial institutions such as Banco Santander, BBVA, La Caixa and Banco Popular.

This warning comes less than three months after the agency reduced its rating of Banco Santander, Banesto, BBVA, CaixaBank, Banco Popular y Banco Sabadell.

"The deepening of the crisis in the Euro-zone, the deterioration of the macroeconomic atmosphere in Spain and Europe and an increase in the volatility of the market and the desire to get away from risk, could have a negative effect on the credit profile of the banks," assures Fitch, which assures the banks have numerous "challenges" to face up to.